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SBI has gained market share in savings deposits, rising from 21.9% in FY01 to 24.2% in FY11.
Over the same period, it lost market share in total deposits, dropping from 24.6% in FY01 to
17.1% in FY11. Thus, the proportion of savings deposits to total deposits increased from 18.4% in
FY01 to 35.1% in FY11. Buy.
FY01-11: SBI gained market share in savings deposits
Among the public sector banks (PSBs) in our coverage universe, SBI mobilised savings bank
(SB) deposits at a CAGR of about 21.3% over FY01-11, compared to 17-18% for other PSBs and
about 20% for the overall Indian banking system. Consequently, SBI’s market share in the total
banking system’s SB deposits increased from about 21.9% as of March 2001 to 24.2% as of
March 2011. SBI is the only bank among PSBs under our coverage to have gained market share
in savings deposits over the past 11 years. The other PSBs have lost about 0.6-1.6% market
share (see Chart 2).
FY01-11: SBI lost market share in total deposits
Total deposits at SBI grew at a 14% CAGR, vs 18-19% CAGR for other PSBs and 18% for the
Indian banking system. Consequently, SBI’s market share in banking system deposits declined
from 24.6% as of March 2001 to about 17.1% as of March 2011 (see Chart 1).
FY01-11: Superior liability franchise is a structural advantage
A loss in overall deposit market share but a gain in savings deposit market share led to a higher
proportion of savings deposits to total deposits at SBI from FY01 to FY11. The ratio of savings
deposits to total deposits increased from 18.4% as of March 2001 to about 35.1% as of March
2011, which is 5% better than the next best – ie, HDFC Bank (see Chart 4). The improvement in
deposit mix led to decline in interest cost in FY11 (see charts 6 and 7). On the back of this, NIMs
for the domestic business improved 45bp yoy to 3.9% in 1QFY12 and are now comparable to the
best in class – ie, HDFC Bank (4.2%). We expect the savings deposit rate, which is currently
regulated at 4.0%, to be de-regulated in the medium term. However, we are not unduly
concerned about the impact of the SB deregulation (see our report ‘Opportunity amid challenges’
– 26 July 2011).
Look beyond near-term earnings; we reiterate Buy
In the long term, strong operating profit growth led by margin expansion should be reflected in a
higher bottom line as the provision for bad loans comes down. We reiterate our Buy on SBI.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SBI has gained market share in savings deposits, rising from 21.9% in FY01 to 24.2% in FY11.
Over the same period, it lost market share in total deposits, dropping from 24.6% in FY01 to
17.1% in FY11. Thus, the proportion of savings deposits to total deposits increased from 18.4% in
FY01 to 35.1% in FY11. Buy.
FY01-11: SBI gained market share in savings deposits
Among the public sector banks (PSBs) in our coverage universe, SBI mobilised savings bank
(SB) deposits at a CAGR of about 21.3% over FY01-11, compared to 17-18% for other PSBs and
about 20% for the overall Indian banking system. Consequently, SBI’s market share in the total
banking system’s SB deposits increased from about 21.9% as of March 2001 to 24.2% as of
March 2011. SBI is the only bank among PSBs under our coverage to have gained market share
in savings deposits over the past 11 years. The other PSBs have lost about 0.6-1.6% market
share (see Chart 2).
FY01-11: SBI lost market share in total deposits
Total deposits at SBI grew at a 14% CAGR, vs 18-19% CAGR for other PSBs and 18% for the
Indian banking system. Consequently, SBI’s market share in banking system deposits declined
from 24.6% as of March 2001 to about 17.1% as of March 2011 (see Chart 1).
FY01-11: Superior liability franchise is a structural advantage
A loss in overall deposit market share but a gain in savings deposit market share led to a higher
proportion of savings deposits to total deposits at SBI from FY01 to FY11. The ratio of savings
deposits to total deposits increased from 18.4% as of March 2001 to about 35.1% as of March
2011, which is 5% better than the next best – ie, HDFC Bank (see Chart 4). The improvement in
deposit mix led to decline in interest cost in FY11 (see charts 6 and 7). On the back of this, NIMs
for the domestic business improved 45bp yoy to 3.9% in 1QFY12 and are now comparable to the
best in class – ie, HDFC Bank (4.2%). We expect the savings deposit rate, which is currently
regulated at 4.0%, to be de-regulated in the medium term. However, we are not unduly
concerned about the impact of the SB deregulation (see our report ‘Opportunity amid challenges’
– 26 July 2011).
Look beyond near-term earnings; we reiterate Buy
In the long term, strong operating profit growth led by margin expansion should be reflected in a
higher bottom line as the provision for bad loans comes down. We reiterate our Buy on SBI.
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